The regulatory wars continue. The eighth largest crypto exchange in the world by traded volume, HitBTC, has barred Japanese citizens from using its platform citing regulatory issues.
According to a blog post by the firm on June 3, 2018, the HitBTC team has made it clear its effort towards getting approved by the nation’s regulatory authority is yet to be successful, and it feels the best move to make is to suspend offering its services to Japanese cryptocurrency traders.
“We would like to thank all our customers from Japan for your support and loyalty. Being among the industry leaders means not only developing outstanding technology to contribute to the industry growth but also an incredible level of responsibility,” the HitBTC team wrote, adding “Bearing in mind extensive regulatory approvals we are yet confident to restart the business very soon.”
Of a truth, Japan has been quite a friendly region for all things bitcoin and cryptocurrency. However, the regulatory authorities were forced to increase regulatory oversight in its cryptosphere after a series of ugly heists and cases of fraud, hit some digital currency exchanges in the nation.
HitBTC Wants to Abide by Regulations, to Open Japanese Subsidiary
Back in April 2018, Japan’s Financial Services Agency formed a study group that would formulate robust guidelines to govern its cryptocurrency industry, and new guidelines were highlighted by BTCManager in May. The members of the committee included the President and Representative Director of Money partners, Taizen Okuyama as well as key personalities from the Bank of Japan, the Consumers Affairs Agency, Ministry of Justice and the Ministry of Finance.
The five-point guidelines require exchanges to shy away from trading privacy-centric cryptocurrencies, shun all forms of insider trading and other corrupt practices, conduct proper KYC and AML operations amongst other requirements. “Without the necessary know-how, we’ve been feeling our way through the dark on how thoroughly we should check these different aspects,” an official of the FSA said.
At current it appears most cryptocurrency exchanges in Japan are finding it difficult to comply with the increased regulatory oversight in the nation. In April 2018, the highly reputable Binance exchange moved to the island nation of Malta due to regulatory challenges it was facing in Japan.
Interestingly, on May 2, 2018, BTCManager informed you that at least eight crypto exchanges requested a withdrawal of their crypto operations in the Asian nation since they felt the regulatory mountains is impossible for them to climb.
To comply with regulations, HitBTC is halting its operations until it can open a Japanese subsidiary, “Previously this year, HitBTC team started working with a worldwide-recognized Japanese law firm, the cooperation aimed to get HitBTC through the local subsidiary setup and licensing procedure to resume its services for Japan residents. The company is actively hiring for the local office and exploring M&A opportunities to expedite the launch of the Japanese operations in Q3 2018.”
HitBTC Not Safe Enough?
The exchange which claims to be the most technologically advanced cryptocurrency trading platform has been in the digital currency industry since 2013, run by Hit Techs Limited. There have been quite many complaints from users of the platform about the poor security level of the exchange resulting in loss of funds.
Back in September 2017, several users of the HitBTC exchange took to popular bitcoin forum, Bitcointalk to express their dissatisfaction over the services of the exchange. One particular trader, Eugene Moura, claimed to had lost all his cryptoassets on the platform even while he had active two-factor authentication (2FA) enabled.
In his words:
“I had 2FA login security activated, so only I can access my account. Suddenly, 16.09.2017 somebody logged into my account (email with login alert came after 1h from login). Somebody using IP address from Switzerland sold everything and changed it into BTC- 0.49, and he transferred it outside.”
In essence, it could be that the regulatory agency does not see HitBTC as a credible platform, hence their refusal to approve the exchange. While some exchanges are leaving the crypto-friendly nation, many other businesses are heading toward Japan.